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https://www.barrons.com/articles/BL-PENTAB-234

Female Insecurity, Female Strength

By

Richard C. Morais

July 13, 2012 12:46 p.m. ET

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By

Richard C. Morais

July 13, 2012 12:46 p.m. ET

This article was written by Christiana Cefalu.

Is there a difference in how privileged women manage their wealth versus women of all income levels? To find out, I went to listen to a panel of high-powered thinkers unveil their report, Financial Experience and Behaviors Among Women, sponsored by Prudential Financial (PRU )

Prior to even setting foot in the luncheon room presenting the results of the study, I had already unconsciously memorized the report's star factoid emblazoned all over info boards and press materials: 53% of the 1,400 women surveyed are primary breadwinners in their households, "whether they like it or not."

Why the caveat? Well, for nearly a third, this wasn't a goal reached, but a role imposed by the challenging economy, i.e. recession-related job loss for their partners. Dig deeper, and we see that 40% of women who are main sources of household income are single or divorced, making them de facto breadwinners. Of the rest, just 22% said they made more than their partner. This varies with race, with married Asian American (33%) and African American (31%) women making more than their spouses. The figure drops to 19% for white women.

This, now, is where the two economic groups of women converge: Despite their breadwinner status, only 20% of the women queried in this report felt very well prepared to make financial decisions, compared to 45% of male peers. As Penta reported six months ago in our column, In Praise of Housewife Economics, women of privilege live with the same insecurity.

So, mind the confidence gap, defined as the gap between a woman's financial goals and her belief that she will be able to reach them, say the authors of this report. Women generally feel less prepared to make the right decisions in maintaining their goals and lifestyles post-retirement, this humility in their abilities showing up in another revealing stat: 13% of financially-dominant women describe themselves as financial 'beginners,' versus 3% of male peers. In the set that earns $50,000 or more, women's confidence gap has widened from 62 points in 2008 to 69 points in 2012.

No surprise, then, that 35% of all the women surveyed called in financial advisors to help them make the right financial decisions; the figure jumped to 64% when married woman alone were broken out. The key barrier for those who don't call upon a financial advisor is perceived cost (53%.)

This report more or less confirms the core findings of the Women of Wealth study of last year, produced by the Family Wealth Advisers Council. The less financial experience a wealthy woman had, the more humble she was, the more she relied on independent financial advisors.

Here, the counterintuitive result of that study: 55% of wealthy retired women said it was "critically important" that their wealth advisor act as an independent quarterback with their other advisors. That figure jumped to over 80% for women who had never worked outside of the home. In contrast, women who worked seemed to eventually acquire the I-can-do-this-better hubris of men, with just 37% having similar expectations of their financial advisors.

Almost a quarter of the married women in the Prudential study said they'd leave their advisor in the event of a partner's death. So there's something to be desired in the quality of those tenuous relationships. What precisely, was revealed in the earlier Women of Wealth Study: "In many cases advisors have regarded the husband as the 'primary' client and failed to see the woman as a client with their own concerns." In the case of this wealthy group of women, "an estimated 70% of women who are widowed change advisors within one year."

So a warning here for financial advisors: treat a spouse like the "little woman" and you're losing that business at the first available opportunity.

The luncheon panelists I was listening to ruminated on an interesting theory, that because women reported they focus their energies on day-to-day household expenses –as opposed to men who said they worry most about the general state of the economy— they're more micro-attuned to the ebbs and flows of family finance. This could make these household CFOS more risk-averse, but it should also make them more confident in investing, the report's author said, because "that's the same muscle you're using."

How true. In these days of financial volatility, the humble, more conservative investors intent on preserving capital have generally done better than the arrogant swashbucklers who think they're smarter than the markets. On that front, women appear to have the advantage, and to understand how these very same qualities also make women eminently wise donors to charity, check out the Penta story, Women Do It Better.

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